-- Connecting the dots between our economy, government and business --
Find yourself the least popular politician in state history and need to pay for clout? Pass an $830 million bond deal with no payments on the principal for 20 years.
With $162 billion more from taxpayers, couldn’t you deliver a few bond upgrades, too
A largely unasked question is becoming glaring: Is Illinois doing all it should to use artificial intelligence to make government cost less and work better? So far, the evidence says no.
Everybody needs a side hustle these days, and mine is Ukraine, where I am now.
Summary and audio linked here.
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Audio and summary
This “taxpayer abuse on steroids” current scenario in Chicago/Cook County/Illinois seems much worse than the abuse during the Daley/Madigan era. Is that the case, or is the level of abuse about the same, and the only reason it seems much worse now is from so much more info being readily available due to the Internet?
In 20 years no one will remember Brandon Johnson. They will however be stuck with his bill.
All I could think was Chicagoans bending over and saying ” Thank you sir, May I have another?!”
The -1 Goons don’t want the public to know what the Democratic Party is doing to the voters stranded on Chicago’s sinking ship. Either get out, get your kids out, or face going down with it.
Leftists Democrats do NOT take debt seriously – the ‘deal’ passed because Democrats don’t ever expect to pay it back, or at least that’s how they see it. Defaulting on debt is but a formality for Democrats. Hope the buyers of these bonds are getting +junk rates – the older they get the more worthless they will be.
Waiting to see at what interest rate, if it’s not double digits I’d be surprised.
Only a fool would take gamble with a city past the edge of bankruptcy with even a return of investment which is probably at least 10 years.
It won’t be double digits. It will be around 7%.
I wouldn’t be surprised if they are securitizing these with some tax asset to get the rate down.
Great piece as always from Austin Berg, but I respectfully disagree with his “reasons why this deal passed.” The actual reason is that almost all of the City Council simply doesn’t understand the deal. They are stupid. Dumb as rocks. Maybe there are four or five council members who understand it, but that’s it. I was told that yesterday by a municipal finance banker who has worked with the current council. From all I see, I agree. They are just too damn stupid to be in charge.
What role (if any) do the “guardians” play — bond counsel, consultants, actuaries, CPAs, underwriters? They all get paid in front. Presumably some of them provide assurances or sales talks to the “deciders.” The official statement will, of course, have all the warnings. The beneficial ownership will probably end up with muni-bond funds or other collective investments. They’ll probably capitalize the first couple of years interest so there won’t be any defaults for a while. If only the eventual losses would reside with millionaire investors who know the risks and who need tax-exempt income … but somehow I doubt that… Read more »
They are all hired by the bond issuer and each does better with more borrowing. All conflicted, in other words, and that is part of the problem. It’s conceivable the SEC will be more aggressive with new administration, but we’ll see.
Many of them operate their personal finances much in the same way. Remember, Brandon Johnson defaulted on several small Capital One credit cards – high interest rate cards with low limits virtually anyone with a pulse can obtain. The guy wrecked his credit score, was sued in court, and then allowed the credit card companies to obtain default judgments against him. Those judgments were there for years while he was a public official. Only when it became an issue during his campaign did he make an effort to take care of the past due debt. And this is coming from… Read more »
He doesn’t do water bills either.
He has the perfect qualifications to be mayor or any politician. Knows nothing about finance/doesn’t pay his bills, now runs a city that costs billions per year and will get a very lucrative-cushy job after he leaves office just like Congress but they never leave their positions.
One source reported that each aldercritter received 125K for their ward, apparently to use as they saw fit.
Ooh, never a good idea to give a Chicago, Cook County, or IL pol money to use as they see fit.
And you wonder why I moved to South Carolina? Im surrounded by cops and other former public employees living off their fat pensions.